LATEST GST CASE LAWS: 25.09.2026
🔥📛 GSTAT to examine if retrospective supplier-registration cancellation warrants ITC denial; Refers issue to Division Bench
➡️ GSTAT Patna has admitted the appeal to examine whether ITC otherwise supported by the prescribed documents under Section 16 of the CGST Act can be denied solely because the supplier’s GST registration was cancelled retrospectively.
➡️ The central issue is whether retrospective cancellation of the supplier’s registration, by itself, is sufficient to invalidate the recipient’s ITC when there is no material indicating collusion, fraud, or any other wrongful conduct on the recipient’s part.
➡️ The Appellant maintains that the ITC claim is backed by documentary evidence and contends that denial of credit merely due to subsequent retrospective cancellation of the supplier’s registration would be legally unsustainable in the absence of evidence questioning the genuineness of the transactions.
➡️ The Appellant has also challenged the proceedings on procedural grounds, alleging a clerical error in the Order-in-Original and contending that the Show Cause Notice was issued beyond the prescribed limitation period.
➡️ After noting that the required authorization and additional grounds had been duly uploaded, the Division Bench admitted the appeal, framed the substantial question concerning denial of ITC on account of retrospective cancellation, issued notice, and listed the matter for November 18, 2026.
✔️ GSTAT Patna – VERMA INDUSTRIES v. AVINASH KUMAR, ASSISTANT COMMISSIONER, STATE TAX BEGUSARAI & ORS. [APL/75/PTN/2026]
🔥📛 Bombay HC restrains coercive action against JP Morgan over refund recovery proceedings under Section 73
➡️ Bombay High Court granted interim protection to JP Morgan Chase Bank National Association against coercive recovery of a GST refund alleged to have been erroneously granted through proceedings under Section 73.
➡️ The Assessee argued that the refund had been allowed through a reasoned sanction order which had attained finality; if the Revenue considered that order incorrect, the proper remedy was to challenge it under Section 107 within the prescribed limitation period.
➡️ According to the Assessee, Section 73 cannot be used as an alternative mechanism to reopen a concluded refund order merely because the Revenue subsequently adopts a different interpretation of the same facts.
➡️ On the export-of-services condition under Section 2(6)(iv), the Assessee contended that receipt of consideration in convertible foreign exchange is satisfied where the amount is credited in convertible foreign exchange to its own Nostro account, particularly in view of its status as an Authorised Dealer Category-I bank and applicable FEMA permissions.
➡️ The Revenue maintained that Section 73(1) independently permits recovery of refunds erroneously granted; however, considering the legal issues involved, the High Court directed filing of an affidavit-in-reply and restrained coercive action against the Assessee until the next hearing on October 27, 2026.
✔️ Bombay HC – JP Morgan Chase Bank National Association versus The Union of India and Anr. [WRIT PETITION NO. 3616 OF 2026]
🔥📛 SC to examine GST on annuity payments under road concession agreements; Stays recovery
➡️ The Supreme Court has issued notice in the assessee’s SLP against the Rajasthan High Court ruling that upheld GST on annuity payments received under a road concession agreement and has directed that no further coercive steps be taken against the assessee in the meantime; the matter is returnable on December 1, 2026.
➡️ The Rajasthan High Court held that where a concessionaire is responsible for construction, design and maintenance of roads, the activity constitutes a taxable “works contract service”; the fact that part of the project cost is funded by NHAI through periodic annuity payments does not convert such consideration into exempt consideration for mere access to a road.
➡️ The High Court ruled that Entry 23/23A of Notification No. 12/2017-CT (Rate), relating to access to roads or bridges against toll or annuity, does not exempt consideration attributable to construction or works contract services. It relied on its earlier decision in CG Tollway Ltd. and treated road construction obligations as distinct from the exempt service of providing road access.
➡️ The assessee’s reliance on an earlier favourable advance ruling was rejected. The Court held that taxability must ultimately be determined from the statutory notification and the true nature of the supply; an earlier interpretation by departmental authorities cannot prevail once the legal position is clarified. It also upheld Circular No. 150/6/2021 as a clarification intended to prevent misinterpretation rather than an amendment overriding the exemption notification.
➡️ In CG Tollway, the Rajasthan High Court had similarly held that under a BOT/DBFOT concession, construction and maintenance undertaken for NHAI could constitute a taxable supply even where consideration consisted of toll-collection rights and other contractual concessions, which could operate as barter. GST paid separately by an EPC subcontractor did not eliminate the concessionaire’s independent GST liability to NHAI, as the two contractual supplies were legally distinct.
✔️ SC – Nagaur Mukundgarh Highways Pvt. Ltd. vs Central Board of Indirect Taxes and Customs & Ors. [Petition(s) for Special Leave to Appeal (C) No(s). 33242/2026]
🔥📛 SC stays Rajasthan HC order declining to adjudicate refund claim of tax deposited during search
➡️ The Supreme Court has issued notice in the SLP and stayed the operation of the Rajasthan High Court’s order dated 17 August 2026, which had directed the competent Revenue authority to pass a speaking order on the assessee’s representation concerning ₹5.28 crore deposited during search proceedings.
➡️ The assessee contended that the ₹5.28 crore payment was extracted under coercion during search, based on rough tax estimates, and that statements were recorded under mental pressure and apprehension of arrest; the Revenue, however, maintained that the payment was voluntary.
➡️ The Rajasthan High Court had declined to directly decide the assessee’s entitlement to refund, observing that the dispute involved contested questions of fact and that an immediate refund direction could be treated as a precedent by other assessees who had made similar deposits, reportedly aggregating about ₹160 crore.
➡️ At the same time, the High Court considered it significant that the amount had remained with the Department for more than eight months without initiation of proceedings or crystallisation of any tax demand, and therefore required the competent authority to explain, through a reasoned order within four weeks, the legal basis for continuing to retain the amount.
➡️ By staying the High Court order, the Supreme Court has also directed that no order be passed on the assessee’s representation until the next hearing; the matter therefore keeps open the important GST issue of whether amounts collected during search, particularly where coercion is alleged and no demand has crystallised, can lawfully be retained by the Department.
✔️ SC – Lupin Forging Pvt. Ltd. vs Union of India & Ors. [Petition for Special Leave to Appeal (C) No. 33253/2026]
🔥📛 Bombay HC to examine concessional tax rate for bulk drugs/raw materials; Stays SCN adjudication
➡️ The Bombay High Court issued notice in Samarth Life Sciences Pvt. Ltd.’s challenge to a show cause notice proposing denial of the concessional GST rate on bulk drugs/raw materials and restrained further adjudication of the notice.
➡️ The Assessee contended that the Revenue relied on the Gujarat AAR ruling in Sterling Biotech Ltd. to deny the concessional rate, but failed to consider the contrary Karnataka AAAR ruling in Biocon Ltd.
➡️ In Biocon Ltd., the Karnataka AAAR held that GST at 5% is applicable even when the covered pharmaceutical product is supplied in bulk drug form, supporting the Assessee’s claim to the concessional rate.
➡️ The High Court observed prima facie that issuance of the show cause notice was not justified when a contrary appellate advance ruling in Biocon Ltd. was already available and had not been appropriately considered by the Revenue.
➡️ The Court directed the Revenue to file its affidavit-in-reply within three weeks, stayed adjudication of the show cause notice, and ordered that no coercive action be taken against the Assessee until the next hearing on October 27, 2026.
✔️ Bombay HC – Samarth Life Sciences Private Limited versus The Union of India and Ors [WRIT PETITION NO. 4720 OF 2026]
🔥📛 Madras HC to examine whether granted refund can be recovered as “erroneous refund” u/s 74
➡️ The Madras High Court granted an interim stay on Section 74 orders where refunds earlier sanctioned after detailed adjudication under Section 54 and the applicable GST Rules were subsequently treated by the department as “erroneous refunds.”
➡️ The assessee argued that once refund claims had been examined and allowed through proper adjudication, the department could not reopen the same issue under Section 74 merely by characterising the sanctioned refunds as erroneous, relying on Eveready Industries India Ltd. and the Telangana High Court decision in Qwik Power Industries India LLP.
➡️ The Revenue relied on the Madras High Court ruling in Premier Cotton Textiles, particularly paragraphs 14 and 15, contending that Eveready Industries had already been considered in the light of the Supreme Court judgment in Grasim Industries Ltd., and that recovery proceedings for erroneous refunds were legally permissible.
➡️ The High Court observed that Sections 73, 74 and 74A expressly cover determination of liability relating to erroneous refunds, but noted that the precedents cited by both sides arose under the Central Excise law; therefore, whether a refund adjudicated under Section 54 can subsequently fall within the expression “erroneous refund” under Section 74(1) requires detailed examination under the GST framework.
➡️ Pending such examination, the Court stayed the impugned Section 74 orders subject to the assessee depositing 10% of the tax demand under each order through the electronic cash or credit ledger within two weeks, and directed the matter to be listed on October 16, 2026.
✔️ Madras HC – Arrow Rebar Services vs State Tax Officer & Ors [WP No. 37181, 37184, 37192 , 37199 & 37203 of 2026]
🔥📛 Gujarat HC issues notice on Avaada’s inverted-duty refund rejection for solar power projects
➡️ Gujarat High Court issued notice in a petition challenging rejection of refund of unutilised ITC arising from an inverted duty structure in respect of solar projects undertaken across multiple States.
➡️ The assessee contended that proceedings under Section 54 of the CGST Act are confined to examination of refund eligibility and cannot be used by the Revenue to reassess or reclassify the taxability of output supplies.
➡️ The Revenue had denied the concessional GST rate applicable to Solar Power Generating Systems (SPGS) on the ground that essential components, particularly solar modules, were not supplied as part of the projects.
➡️ The assessee argued that Entry 201A of the applicable Rate Notification is wider in scope and expressly covers “parts for manufacture” of SPGS; therefore, supply of all core or essential components cannot be treated as a mandatory condition for claiming the concessional rate.
➡️ It was further argued that, where the jurisdictional facts necessary for denying the concessional rate or reopening the characterization of output supplies are absent, rejection of the refund becomes without jurisdiction and non est; the Gujarat High Court has issued notice on these contentions.
✔️ Gujarat HC – Avaada Clean Project Pvt. Ltd vs State of Gujarat & ors
🔥📛 SC: Dismisses SLP, upholds refund with interest on mistaken ECL deposit, citing delayed deficiency memo
➡️ The Supreme Court dismissed the Revenue’s SLP against the Delhi High Court judgment directing refund of ₹3.3 crore inadvertently deposited by an assessee holding an ISD registration in its Electronic Cash Ledger, finding no ground to interfere under Article 136 of the Constitution.
➡️ The Delhi High Court held that the GST Department could not indefinitely retain an amount admittedly deposited by mistake, particularly when the money had remained with the Revenue since 2018 and was otherwise liable to be refunded to the assessee.
➡️ The Court emphasized strict compliance with Rule 90 of the CGST Rules, observing that a deficiency memo in Form GST RFD-03 must be issued within the prescribed period; issuance of such memo nearly two years after the refund application could not justify continued withholding of the refund.
➡️ Since the Department neither granted the refund nor issued the requisite acknowledgment within the statutory framework, even after expiry of the 60-day period relevant for delayed refunds, the High Court directed payment of the refund with 6% interest and provided for 18% interest if the Department failed to comply within the Court-prescribed deadline.
➡️ While granting interest, the High Court excluded the period between issuance of the deficiency memo and the assessee’s first subsequent follow-up because the assessee had withdrawn its refund application during that interval; the Supreme Court’s dismissal of the SLP leaves this relief and the High Court’s directions undisturbed.
✔️ SC – Matrix Cellular (International) Services Pvt. Ltd. vs The Principal Commissioner, State Tax, Delhi & Anr. [Petition(s) for Special Leave to Appeal (C) No(s).23802-23803/2025]
🔥📛 GSTAT: Disclosure of interest-income in GSTR-9C, inadvertently reported as other State turnover, insufficient to claim exemption
➡️ GSTAT Raipur upheld the GST demand of about ₹63.30 lakh, interest of about ₹62.62 lakh and penalty of about ₹6.33 lakh arising from unreconciled turnover of ₹3.51 crore reported in Table 7G of GSTR-9C for July 2017 to March 2018, where Jana Small Finance Bank claimed that the amount represented interest-related adjustments pertaining to other States but was inadvertently reported as Chhattisgarh turnover.
➡️ The Tribunal accepted the legal proposition that interest income covered by Entry 27 of Notification No. 12/2017-Central Tax (Rate), relating to deposits, loans or advances where consideration is represented by interest or discount, is exempt from GST; however, entitlement to the exemption depends upon the assessee establishing that the disputed amount actually represents such exempt interest income.
➡️ GSTAT held that disclosure in GSTR-9C, even though it is a statutory form, cannot by itself establish the nature or State-wise attribution of the disputed turnover. Where exemption is claimed, the burden remains on the assessee to produce reliable supporting documents proving that the amount represented exempt interest and had been wrongly reported as turnover of the concerned State.
➡️ The CA certificate produced by the assessee was found insufficient because it neither disclosed the documents examined nor explained the basis for verification. The assessee also failed to correlate specific adjustments such as NPA interest reversals, securitisation-related interest reversals, value-dated transaction reversals and NACH cheque-bounce interest provisions with exempt interest attributable to other States; failure to produce available evidence justified drawing an adverse inference.
➡️ On objections relating to inadequate show-cause notice, non-consideration of reply and absence of personal hearing, GSTAT held that even assuming procedural deficiencies, the result would not change because the assessee had failed to substantiate its exemption claim with documentary evidence. The ruling underscores that GST exemptions and State-wise turnover corrections must be supported by contemporaneous, transaction-level evidence rather than reconciliation statements or general certificates alone.
✔️ GSTAT Raipur – Jana Small Finance Bank Limited vs Shri Pushpendra Kumar Meena, Commissioner (State GST), Chhattisgarh [APL/30/RPR/2026]
🔥📛 GSTAT: Tax, interest, penalty demand illegal without serving a show-cause notice to taxpayer
➡️ GSTAT Kolkata quashed the demand raised under Section 74 because no statutory Show Cause Notice (SCN) had been issued before determining tax, interest and penalty; an order in Form GST DRC-07, without a valid SCN, was held to be fundamentally illegal.
➡️ The Tribunal held that tax, interest and penalty can be demanded under Section 74 only after serving a proper SCN and considering the taxpayer’s representation. Failure to issue the SCN deprived the assessee of an effective opportunity to respond and consequently vitiated the entire adjudication proceedings.
➡️ Reading Section 74 with Rule 142, GSTAT clarified that the Proper Officer must first serve the statutory notice contemplated under Section 74(1), while Forms GST DRC-01 and GST DRC-02 merely contain summaries of the notice or statement; these forms cannot replace the substantive SCN required by law.
➡️ Relying on Metal Forgings and ArcelorMittal Nippon Steel India Ltd., the Tribunal reiterated that a statutory SCN must clearly disclose the tax demand, material facts, allegations and supporting basis so that the taxpayer can make an effective defence; a communication in any other form cannot substitute this mandatory requirement.
➡️ Referring to the Supreme Court’s ruling in Tata Steel Limited, GSTAT further emphasised that proceedings under Section 74 require allegations of fraud, wilful misstatement or suppression to be founded on facts expressly disclosed in the SCN itself; the SCN is therefore the foundational document for adjudication of tax disputes and cannot be dispensed with.
✔️ GSTAT Kolkata – Partha Tribedi vs Vivek Ranjan, Proprietor, M/s Tribedi Enterprise vs Vivek Ranjan, Assistant Commissioner [Appeal No. APL/115/KLK/2026]
🔥📛 HC: “Wilful” suppression requires discernible tax evasion intent, distinct from mere omission; Quashes Section-74 proceedings
➡️ Gauhati HC set aside the SCN issued under Section 74, holding that mere “suppression” is insufficient; the suppression or misstatement must be wilful and deliberate, showing a conscious intention to evade GST, and not merely an omission or difference in tax interpretation.
➡️ Invocation of Section 74 requires the SCN itself to disclose, from its plain reading, the material and reasons supporting a prima facie conclusion of fraud, wilful misstatement or suppression with intent to evade tax; absence of such jurisdictional facts renders the assumption of jurisdiction unsustainable.
➡️ The assessee had disclosed the price-adjustment receipts in its balance sheets, income-tax returns and GST annual returns and had claimed exemption based on a bona fide belief that price adjustments relating to pre-GST works contracts were not taxable; such disclosed transactions could not ordinarily be treated as concealed or suppressed.
➡️ Relying on Supreme Court rulings including Pushpam Pharmaceutical and Anand Nishikawa, the HC reiterated that “suppression of facts” for extended-demand provisions requires a deliberate act intended to avoid tax, and Section 74 cannot be invoked merely because the Department subsequently disputes the assessee’s tax position.
➡️ Since the Revenue had not shown any proper pre-SCN enquiry or relevant material establishing an intention to evade tax, and the assessee had responded to notices and furnished the required records, the HC held that proceedings under Section 74 were based on non-germane considerations and amounted to an unwarranted exercise of jurisdiction, justifying interference through writ of certiorari.
✔️ Gauhati HC – Bhagya Kalita vs UOI & ors [W.P(C) NO. 6154/2024]
